Correlation Between Rightmove PLC and BH Macro
Can any of the company-specific risk be diversified away by investing in both Rightmove PLC and BH Macro at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Rightmove PLC and BH Macro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rightmove PLC and BH Macro Limited, you can compare the effects of market volatilities on Rightmove PLC and BH Macro and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Rightmove PLC with a short position of BH Macro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rightmove PLC and BH Macro.
Diversification Opportunities for Rightmove PLC and BH Macro
-0.32 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Rightmove and BHMU is -0.32. Overlapping area represents the amount of risk that can be diversified away by holding Rightmove PLC and BH Macro Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BH Macro Limited and Rightmove PLC is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Rightmove PLC are associated (or correlated) with BH Macro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BH Macro Limited has no effect on the direction of Rightmove PLC i.e., Rightmove PLC and BH Macro go up and down completely randomly.
Pair Corralation between Rightmove PLC and BH Macro
Assuming the 90 days trading horizon Rightmove PLC is expected to generate 1.88 times more return on investment than BH Macro. However, Rightmove PLC is 1.88 times more volatile than BH Macro Limited. It trades about 0.03 of its potential returns per unit of risk. BH Macro Limited is currently generating about 0.03 per unit of risk. If you would invest 55,388 in Rightmove PLC on August 26, 2024 and sell it today you would earn a total of 6,552 from holding Rightmove PLC or generate 11.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rightmove PLC vs. BH Macro Limited
Performance |
| Timeline |
| Rightmove PLC |
| BH Macro Limited |
Rightmove PLC and BH Macro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rightmove PLC and BH Macro
The main advantage of trading using opposite Rightmove PLC and BH Macro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rightmove PLC position performs unexpectedly, BH Macro can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in BH Macro will offset losses from the drop in BH Macro's long position.| Rightmove PLC vs. Alfa Financial Software | Rightmove PLC vs. British American Tobacco | Rightmove PLC vs. Systemair AB | Rightmove PLC vs. Scandinavian Tobacco Group |
| BH Macro vs. Westlake Chemical Corp | BH Macro vs. Thor Mining PLC | BH Macro vs. McEwen Mining | BH Macro vs. Gaztransport et Technigaz |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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